Rich biz school students have no clue what workers make, massively overestimate their income

Rich kids are often disconnected from reality having lived in their own bubble of privilege and wealth. Nina Strohminger, a business school professor, highlighted the disconnect after listening to their answers about what they thought the average American worker earned. When the actual average is $45k, many of the students assumed the average American made money in six figures. “I asked Wharton students what they thought the average American worker makes per year and 25% of them thought it was over six figures,” she tweeted. “One of them thought it was $800k. Really not sure what to make of this.” Many users on Twitter said it explained why those in decision-making positions at the corporate level and at the federal level were apathetic to workers. 

Strohminger is a Professor of Legal Studies & Business Ethics at the Wharton School of the University of Pennsylvania and was left stunned by their disconnect with reality. Strohminger said people were making the wrong conclusion by pinning the findings on just Wharton students and pointed out that "people are notoriously bad at making this kind of estimate, thinking the gap between rich and poor is smaller than it is," in a follow-up tweet. It's no secret that income inequality has been getting wider, with the rich making insane amounts of money. People on Twitter were disgusted by the disconnect with the working class. Not many were surprised, pointing to Donald Trump, an alumnus of Wharton. One person tweeted: "Wharton students thinking the average American is an investment banker at Deutsche Bank." Another commented, "So Wharton basically produces lots of idiots like Trump who just happen to be rich. Got it."
 

Nina Strohminger shared a couple of papers highlighting how out of touch people were with reality which played into the hands of the rich. In one study, when people were asked what the appropriate ratio of CEO to worker pay should be, they say 7:1. Ask them what they think it is, and they estimate 30:1. Meanwhile, the actual ratio in the United States is 354:1. It's always in the interests of the rich to give the impression they aren't earning as much as they are and as it turns out they make more than 10 times what the public even estimates they make. Not to mention, they make 50 times more than what many people considered to be appropriate income for a CEO. 

One of the reasons why the business school students possibly assumed workers made way more than they actually do is that the wages in the United States have been stagnant for a long while. The federal minimum wage has remained at just $7.25 since 2009. The national minimum wage rose in step with productivity growth from 1938, when it was first introduced, until 1968. Since then, the minimum wage hasn't accounted for inflation which meant that employees earning minimum wage had a fraction of the purchasing power of those from earlier generations. According to The Center for Economic and Policy Research (CEPR), if the minimum wage did rise in step with productivity growth since 1968 it would be over $24 an hour today. "If the productivity of less-skilled workers has not kept pace with average productivity, this was by design. It was not the fault of these workers; it was the fault of those who designed policies that had the effect of devaluing their skills," noted CEPR.

By keeping the federal minimum wage low, companies have been able to pocket the extra profits. The pandemic has been a windfall for the rich. A report by Oxfam found that the top ten richest people doubled their income during the pandemic alone, while incomes of 99 percent of humanity fell. The world’s ten richest men more than doubled their fortunes from $700 billion to $1.5 trillion —at a rate of $15,000 per second or $1.3 billion a day— during the first two years of a pandemic that has seen the incomes of 99 percent of humanity fall and over 160 million more people forced into poverty. “If these ten men were to lose 99.999 percent of their wealth tomorrow, they would still be richer than 99 percent of all the people on this planet,” said Oxfam International’s Executive Director Gabriela Bucher. “They now have six times more wealth than the poorest 3.1 billion people.”